BullMarketRun.com

Special Notes:

David Coffin, well-known and respected throughout the mining industry, has passed away suddenly. So our deepest condolences to his family, especially his best friend and brother Eric who partnered with him on the very popular HRA Advisory. David often spoke at conferences and his insight, wisdom and knowledge will be greatly missed. Eric will continue with the HRA Advisory, and that’s what David would have wanted.

Stock markets in both Canada (Family Day) and the United States (President’s Day) are closed Monday.

TSX Venture Exchange And Gold

The Venture Exchange continues to perform according to script and now appears set to challenge the 1675 resistance area.  The daily chart was showing an overbought condition in early February with the first major support area being 1625.  Sure enough, after climbing as high as 1674 February 9, the Index fell nearly 50 points or 3% as it hit 1625 exactly last Tuesday.  That helped immensely in unwinding the overbought condition, and now the CDNX is well-positioned for a potential fresh breakout as John’s chart outlines.  Volume must continue to increase.

Of major significance is the fact the Venture Exchange’s 100-day moving average (SMA) is now reversing to the upside.  If history is any indicator, this is an extremely bullish development and the bears are advised to run for cover.  Their control over this market since March of last year, as we have been stating for several weeks, has ended.  Commodities are looking strong and the growth in global money supply will continue to be a major factor in fueling this bull run.

For the week, the Venture was up 4 points as it closed at 1658.  There are still many scared retail investors sitting on the sidelines, wasting their time watching CNN and worrying about Greece and the euro zone and everything else the mainstream media is trying to frighten people about.  The ground underneath them has shifted but they don’t know it yet.  These investors will be the ones joining the party late in a “reverse capitulation” and when they do, it’ll be time to take profits.  Thank you very much.

Gold

Gold continues to give very encouraging signs with the price holding in the low $1,700’s while the recent overbought condition has unwound significantly.  The yellow metal closed Friday almost unchanged from the previous week, resting at solid support around $1,725.

Demand for Gold hit an all-time high in 2011 as European, Indian and Chinese demand soared according to the World Gold Council’s just-released annual report.  In Europe, Germany and Switzerland were the main drivers of the growth as the euro zone debt crisis escalated and investors looked for safe havens.

While the jewelry market was resilient, the Gold investment market grew more with a 5% increase in annual demand.  Total demand around the world rose to 4,067 tonnes, worth around $206 billion – the first time annual demand for Gold has risen above $200 billion.

India is still the country where most Gold is sold, despite the recent weakness of the rupee, with around 500 metric tons of Gold jewelry sold in 2012 and total demand of 933 metric tons.

There was a hefty increase in Chinese demand which led the WGC to predict that China is emerging as the world’s biggest buyer of Gold.  Check out the chart below – China’s growing appetite for Gold is a trend that is likely still in its early stages.

Central banks also hiked their purchases from 77 metric tons in 2010 to 440 metric tons in 2011 as worries about a second global recession grew.

Silver fell 31 cents for the week to close at $33.59.  Copper lost 11 cents to $3.72.  Crude Oil, on concerns about Iran, jumped $4.57 a barrel to $103.24 while the U.S. Dollar Index gained more than one-third of a point to 79.39.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, is having a huge impact on Gold.

The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders in general, an environment of historically low interest rates and negative real interest rates that won’t end anytime soon (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), money supply growth, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on.  It’s hard to imagine Gold not performing well in this environment.  The Middle East is being turned on its head and that could ultimately have major positive consequences for Gold.